Weekly technical Analysis for week ended 29th October 2011.
Bulls have not at-least able to conquer the 5200 successfully in this truncated week. Even though the
week was a truncated week it was an eventful week. Nifty was able to move above 5200 on diwali day
and on next trading day it was a huge gap up day way above the 5200 indicating that bulls were able to
go past the resistance of bears offered at 5200 level. The movement above 5200 is a major victory for
bulls and we can see further movement of market on upsides. One of the noticing features of the
movement of nifty during the week is that nifty was able to successfully move above 100 day EMA and
also on Friday it moved and closed above 200 day EMA. It’s a major achievement for the bulls and we
have to see whether follow up buying takes or not. Nifty is now entering into huge resistance levels and
it is expected to face huge resistance at every rise. Nifty has to move and close above 5450 then 5500
and then 5700 then only we can say that bulls were able to defeat bears. Any failure of nifty move past
these levels would result in nifty falling towards 5200 again. Another area of strength for bulls is that
they were able to take nifty above 100 week EMA which is major achievement for bulls and not this 100
week EMA would offer support for any downward movement of nifty. The 100 week EMA is at 5257 so
any downward movement of nifty is expected to find support at those levels.
In the above chart it can be clearly seen that on weekly charts nifty has formed a higher high which has
been preceded by higher low which is one of the powerful bullish signal, so now till a lower low is
formed the trend would appears to be up. It can be seen in the above chart that nifty has broken below
the H&S pattern (neckline) in August has moved down there after and now it has started to move up
towards the neck line, we have to see whether the neck line would offer resistance or not. Generally
when a H&S pattern is broken the price first moves down and then it moves up towards the neck line it
moves slightly above the neck line and then collapses in the direction of the break out. So will the neck
line offer resistance or not we have to see if nifty fails to move above the neck line it would form a
perfect H&S pattern and we have all chances of market collapsing down ears towards 4700 levels again.
One of the noticing features of the neck line is that it’s nearly as 2 year trend line and it would not be
easy to break above it just in a flash. So nifty is expected to face huge resistance at around 5450-5500
levels (the point where the trend-line is present. Notice the volumes on the current rise the volumes
have been constantly falling or reducing on each subsequent rise. Does that indicate strength of bulls. Its
left to your imagination. You may be thinking that I am still a bear when everybody is gung ho above the
up-move above 5200 level that too with a gap up, I only tell what the patterns are indicating irrespective
of what other are saying. When all the negative patterns are negated then we can say that bulls have
Positive for the market:
• Nifty has exactly taken support at 200 week EMA.
• nifty has just moved above 15 week EMA.
• Nifty has moved above 50 day EMA,100 day EMA and 200 day EMA.
• Weekly MACD has given a buy signal
• Daily MACD is in buy signal.
• Daily and weekly stochastic is in buy mode.
• 50 day EMA is below 100 day EMA is below 200 day EMA indicating extreme weakness.
• weekly MACD is in sell mode,
• Monthly MACD is in sell mode indicating weakness in the market.
• 15 week EMA is below 50 week and 100 week EMA.
I would be furnishing Elliott wave update next week as I am busy in some personal work.
M. Sri Mahidar
Trend is Friend.
Sunday, October 30th 19.37 IST